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Must Lenders Approve Property Divisions?
Question: We have a home which sits on a large parcel of land. Our idea is to sub-divide the land and sell off a piece to reduce our mortgage debt and monthly principal. Do we need approval from our current lender?
Answer: Your property, all of your property, is security for your loan. If you sell off a piece, the lender has less security. As well, your mortgage agreement likely forbids the sale of some or all of the property without the lender's permission or without the loan being payable in full the moment you sell. Your choices look like this: You can sell the land and pay off the current lender. You can sell the land and use some or all of the sale proceeds to reduce your existing debt. This will require the lender's written permission. Or, you can sell the land and refinance the current loan so that it is paid off at the time of the land sale. Please speak with your lender for details.
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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